Karouni

KAROUNI (TROY 100% THROUGH TROY RESOURCES GUYANA INC.)

OCCUPATIONAL HEALTH AND SAFETY

The Company remains strongly committed to the long-term health and safety of its employees. In April 2017, safety programme efforts were increased, including the introduction of the SLAM (Stop. Look. Analyse. Manage.) program. After initiation of the programme, the Company saw an immediate decrease in both the Lost Time Incidents Frequency Rate (“LTIFR”) and the Total Recordable Injury Frequency Rate (“TRIFR”).

The Karouni operation recorded 1.5 million-man hours during the year. The TRIFR (measured as recordable incidents per 1,000,000-man hours) has increased and is currently at just over 20. There were nine lost time incidents during the year which is a 22% decrease. Unacceptably, seven of the nine LTI’s occurred in the last four months of the year.

OPERATIONS SUMMARY

All permits and licenses are up to date and the Company is in full compliance with its ongoing environmental and operational requirements. The Company has initiated the permitting process for the mining of the satellite deposits at Larken and Spearpoint. The Company does not expect any issues or delays with regards to receiving permits for these projects and these additional mining permits could be received as early as the end of December 2018.

The Company completed trial rehabilitation programmes on select areas. This rehabilitation has been generally successful and the Company plans to expand the trial in the coming year. The Company currently has over 7,000 seedlings in the nursery, most of which will be planted during the coming year.

OPERATIONAL REVIEW

The Company completed its operator training plan during the year with most of the Company’s operators receiving certificates of competency from both the equipment manufacturer and the Company. With the initial training objectives completed, the training program is now focusing on refresher training and individual training where needed.

During the year, all contractors supplying mining equipment were phased out according to plan. Two additional ADT 40 tonne articulated trucks were added to the fleet. The addition of these trucks and the elimination of mining contractors has had a positive impact on costs and productivity.

During the year, the site moved past the operational challenges of the previous years. Smarts 3 pit was remediated and there has been uninterrupted production from this area since the second quarter of the year. In addition, the ROM stockpiles have increased substantially and, therefore, the rain and other weather events no longer pose a threat to gold production. Finally, issues in the crushing circuit have been ironed out making it more reliable such that the plant is now comfortably producing at design levels for sustained periods.

During the September quarter, despite the heavy rainfall, mine production was consistent with activities focused on the remediation of Smarts 3 pit enabling the ROM stockpile to increase.

Mill throughput was excellent but gold production was low at 12,885 ounces due to the low head grade from treating lower grade material while awaiting material from the recommencement of mining from Smarts 3.

Early in the December quarter, access to Smarts 3 was re-established and higher grades in Smarts 4 saw ore production of 222,785 tonnes at a much improved an average grade of 2.42 g/t Au, which resulted in higher gold production despite a 7% decrease in tonnes milled which was more than offset by a 32% increase in grade milled. Gold production for the quarter was 16,109 ounces. The reduction in tonnes milled was a result of unscheduled maintenance activities and a partial mill reline. Just as importantly, the ROM stockpile continued to increase.

During the March quarter, a total of 1,106,000 tonnes of material were mined, including 271,000 tonnes of ore at an average grade of 2.49 g/t Au. The decrease in total mined tonnes generally reflected the anticipated changes in the mining plan as per the budget. However, during February, production volumes were affected by low availability of mining equipment, mainly excavators. Mining activities for the quarter again focused on the high-grade areas of Smarts 3 and 4 with predominately waste stripping occurring at Hicks.

Also during the March quarter, tonnes processed were below budget due to unscheduled mill downtime in January and screening issues in February. The reduction in tonnes milled was more than offset by a 35% increase in the grade milled of 3.27 g/t Au, with gold recovery for the quarter at 96.0%, up substantially on previous quarters. Gold production for the quarter was a record for the project of 21,703 ounces.

In the June quarter, production volumes were somewhat affected by low availability of mining equipment, restricted mining space due to the narrowing of the Smarts 3 and 4 pits and the usual wet season weather.

Processing saw a 9% decrease from the previous quarter because of material handling problems due to the wet nature of the ore and several unplanned mill stoppages due to breakdowns. The reduction in tonnes milled from budget was more than offset by increased mill head grade, resulting in total gold production of 19,510 ounces, exceeding budget.

As at 30 June 2018, stockpiles of ROM and crushed ore encompassed 167,000 tonnes at an average grade of 1.67 g/t for 8,945 ounces.

During the year, the Company completed its cost initiative review and productivity programme. Some of the results are summarized in the tables below.